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ESG integration at AXA IM

A key driver

AXA IM's conviction is that RI is a key driver of value creation, and the Management Board has therefore decided to progressively integrate ESG analysis across all asset classes. AXA IM has invested significant resources into building a team of 14 experienced RI professionals. Together, the team acts as a centre of excellence, supporting the integration of ESG risks and opportunities in the investment processes of our investment platforms, by working closely with RI specialists across the teams.

As part of AXA IM’s fiduciary duties to its clients and long term, active investment approach, we:

  • always strongly incorporated broad non-financial criteria in our investment process;
  • guided companies towards more responsible behavior through engagement activities;
  • have set our own restrictions which apply to all our assets under management1.

Foundations

Our screening policy applies to more than 90% of assets as of end 2019. We were among the first asset managers to put in place a blanket exclusion for companies which derive more than 30% of revenues from coal. We also exclude assets linked to food commodities and palm oil production and follow exclusion rules on controversial weapons. To find out more about our RI sectorial exclusion policies: https://www.axa-im.com/responsible-investing/sector-investment-guidelines

Framework

Screening and scoring provide a stable base for our approach. From here we steadily increase the intensity and assign investment products to one of three responsible investment categories, all of which are subject to our active stewardship policy.

1 Source: AXA IM as of September 2019, excluding index and exempted funds

ESG Integrated

Funds in this group expand on our screening policy to exclude:

Tobacco: We avoid financing the tobacco industry;

White Phosphorus: We avoid financing companies involved in the development, production, maintenance or sale of white phosphorus weapons;

United Nations Global Compact (UNGC) Principles: We avoid financing companies involved in severe violation of the 10 UNGC Principles;

ESG quality: a tight monitoring is performed on companies with a poor quality ESG Score (as defined below). A portfolio manager must submit a written justification of any decision to hold stocks with an ESG score below 2. A review of these submissions is carried out twice a year.

The fund managers are provided with ESG Scores, research and Key Performance Indicators (KPIs) through their front office tool to ensure ESG risks and opportunities are incorporated into company analysis. This includes:

ESG Scores: ESG Scores range from 0 to 10 for each ESG pillar and cover more than 8,500 companies [2] and 100 countries. Calculated twice a year using a proprietary methodology developed and maintained by the central RI team. These scores are then made available to portfolio managers and analysts across the company.

RI specialists within the investment teams are also able to support portfolio managers and financial analysts in their analysis of a company:

Internal and external ESG research: Internal ESG research on themes with a focus on climate change, biodiversity, gender and health. These analyses are supported by broker research, as well as regular meetings with companies, participation in conferences and industry events. The RI team also provides analysis training on sector-related issues, as well as controversies assessment;

Training on key ESG issues and on engagement done by the central RI team through physical and technology-enabled sessions.

[2] Source: AXA IM as of April 2020

Sustainable

Funds in this category embed sustainability factors more meaningfully into the portfolio construction process, with a significant and engaging ESG approach. They adopt the same screening policies as detailed above but use responsible investment criteria to refine the investment universe further. For example, funds might follow a best-in-class policy with an eligible universe defined by removing the bottom companies in terms of ESG-score with a selectivity threshold defined in the prospectus. They might also for instance adjust portfolios to target a specific KPI such as a carbon footprint.

Each specific objective is clearly stated in the fund prospectus, and in a manner aligned to the latest regulatory demands. Granular ESG and voting reporting is available on demand, and detailed information on the broad ESG approach at company and fund level is provided.
At least 10% of a benchmark index will be excluded from investments in this category. Local market labelling regimes may add further requirements.

Impact

This is our most focused responsible investment offering. Products incorporate the demands of the Sustainable category but are specifically designed to have a direct and positive impact on society and/or the environment.
Our strategies will report definitive and measurable data against impact KPIs such as carbon footprint, and each will target one or more UN SDGs. These strategies have a parallel commitment to deliver market-rate returns by tapping into key themes of the sustainability economy.
Portfolio managers may directly invest in projects or companies which address the SDGs, or in listed assets or funds which are exposed. Funds incorporate our full exclusion and stewardship policies and take an enhanced engagement approach on ESG and SDG issues, seeking change where appropriate.

Stewardship: voting and engagement activities

Stewardship is the concept where investors seek to promote the long-term success of companies so that the underlying beneficiaries - namely, our clients - also prosper. We believe effective stewardship benefits companies, investors and society as a whole.

AXA IM takes its stewardship responsibilities seriously and we devote significant resources and efforts to ensure our clients’ assets are protected and enhanced over time. There is a dedicated team that conducts engagement and voting around the world. We adopt an active and impactful approach to stewardship by using our scale as a global investment manager to discuss with companies and participate to market practices. In doing so, we strive to reduce investment risk and enhance returns as well as drive positive impacts for our society and the environment. These are key to achieving sustainable long-term value creation for our clients.

We do this through:

  • Researching ESG factors for investment and stewardship purposes;
  • Addressing material risks and opportunities through dialogue with investee companies;
  • Using our investor rights by actively voting in a considered manner at shareholder meetings;
  • Influencing governments, regulators and policy makers;
  • Collaborating with other investors and stakeholders.

We believe that real change can be achieved by being an engaged and active investor. To this end, we:

  • Seek to understand the ESG issues that impact companies in which we are invested;
  • Evaluate a company’s policies and practices in relation to relevant issues;
  • Encourage companies to align with best practice on ESG issues;
  • Engage in constructive dialogue where a company’s approach or practices on ESG matters is below investor expectations;
  • Leverage our clients’ investor rights to push for desired outcomes from investee companies;
  • Align our votes at general meetings with our engagement objectives.

ESG

ESG Methodology at AXA IM
ESG

ESG Indicators in our Reporting
ESG

ESG Metrics methodology
ESG

Climate investing at AXA IM
ESG

SFDR

    Disclaimer

    This document does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein 

    Information about the staff of AXA Investment Managers group and / or AXA Investment Managers is only informative. We do not guarantee the fact that staff remains employed by AXA Investment Managers group and / or AXA Investment Managers and exercise or continue to exercise in AXA Investment Managers group and / or AXA Investment Managers.

    Issued by AXA INVESTMENT MANAGERS PARIS, a company incorporated under the laws of France, having its registered office located at Tour Majunga, 6 place de la Pyramide, 92800 Puteaux, registered with the Nanterre Trade and Companies Register under number 353 534 506, and a Portfolio Management Company, holder of AMF approval no. GP 92-08, issued on 7 April 1992. In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.

    Risk Warning

    The value of investments, and the income they generate, can go down as well as up and investors may not get back the amount originally invested.